- Homebase data are less useful than usual in July, but business surveys point to sluggish growth in payrolls.
- We see an even chance of the Sahm rule being triggered and expect a below-trend 0.2% increase in AHE.
- Growth in unit labor costs has slowed to well below 2%, pointing to further falls in core inflation ahead.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Chair Powell says a September easing “could be on the table”, now that labor market risks loom larger.
- Growth in employment costs slowed in Q2, and a further softening in wage growth ahead looks likely.
- The July ISM survey probably will show manufacturing is still treading water; claims are a wildcard today.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The FOMC likely will say inflation progress has been better than “modest” and highlight labor market risks.
- A September easing remains very likely; further easing this year is probable, but won’t be signalled strongly yet.
- We expect a below-consensus increase of 0.8% in the ECI in Q2, supporting our dovish Fed view.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The low personal saving rate stems from low unemployment and recent rapid growth in asset prices.
- The saving rate will likely rise over the next year as unemployment rises and stock price growth slows.
- Consumer confidence probably ticked up in July, but from a level consistent with soft consumption growth.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- June's muted core PCE deflator likely will be followed by sustained benign readings.
- Consumption will slow further, as the labor market weakens and the savings rate creeps up.
- July's regional Fed services surveys also support the case for a rapid easing of monetary policy.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We think GDP grew by 2.2% in Q2, but we expect a weaker second half as consumption softens.
- A 2.7% rise in the core PCE deflator should reassure the Fed that the 3.7% spike in Q1 was a blip.
- The further uptick in the S&P Global Composite PMI probably overstates the economy's strength.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Q2 GDP likely rose at a faster rate than in Q1 but well below the rapid growth seen in 2023.
- A further slowdown lies ahead, as high interest rates bite harder and the personal saving rate normalizes.
- The earlier release of advance trade and inventories data should make GDP forecasts more accurate.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- All bets are off for November, so it makes little sense to change macro forecasts at this point.
- The further fall in pending home sales in May points to a steep decline in existing home sales in June.
- We expect a weaker labor market and ongoing lack of supply to mean sales remain subdued for some time.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Interest rate rules monitored by the FOMC suggest rates should already have been reduced to 4%.
- Policy rules are sensitive to the assumed neutral rate, but also to unemployment, which will rise further.
- The latest readings for a raft of leading indicators suggest that lower housing inflation is here to stay.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Claims boosted by auto plant shutdowns and Hurricane Beryl, but the underlying trend is rising.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Tentative signs of recovery in the multi-family sector, but single-family starts look set to fall further.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Equipment investment likely leapt by about 7% in Q2, driven by surging transport and computer spending...
- ...But these components are volatile; high borrowing costs will weigh on capex unrelated to the AI boom.
- The jump in jobless claims was due to auto plant closures and Hurricane Beryl, but the trend is rising too.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The manufacturing downturn is over, but growth in output in the second half of this year will be sluggish.
- High mortgage rates and excess new home inventory suggest single-family housing starts will fall further.
- We look today for a pick-up in initial jobless claims, but the data are prone to unpredictable swings in July.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Real consumption likely grew at a near-2% rate in Q2, down from 2023’s rapid pace.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The jump in core retail sales in June has the hallmarks of a weather-related blip; expect a pullback in July.
- We expect partial recoveries in June housing starts and building permits, but a poor outturn for Q2 overall.
- Manufacturing output likely grew briskly in both June and Q2, but the recovery will slow in Q3.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Our Homebase model points to a 200K rise in private payrolls, but its errors in prior Julys have been big...
- ...So we will place more weight this time on the NFIB, S&P Global, ISM and regional Fed business surveys.
- Headline retail sales probably fell in June, due to a slump in sales of autos and gasoline.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
